President Donald Trump enacted a wide-ranging executive order on Monday, mandating that pharmaceutical companies voluntarily reduce prescription drug costs within 30 days or potentially face future governmental limits on drug expenditures.

The directive mandates the health department, under the leadership of Robert F. Kennedy Jr., to negotiate novel drug prices within the forthcoming month. Should agreements fail to materialize, Kennedy will be charged with formulating a new regulation that aligns U.S. medication costs with the lower prices prevalent in other nations.

"We will achieve parity," Trump stated during a press conference on Monday morning. "Everyone will contribute the same amount. Our payments will mirror those made in Europe."

It's not clear what effect, if any, the Republican president's order will have on the many Americans with private health insurance. The government has the most power to change the price it pays for drugs in Medicare and Medicaid.

Trump's anticipated yet uncertain reductions in drug prices were announced merely hours following the Republican-controlled House's unveiling of its new strategy to curtail $880 billion from Medicaid.

The nation’s pharmaceutical lobby, representing the foremost U.S. drug manufacturers, promptly countered Trump’s directive, denouncing it as a detrimental arrangement for American patients. Pharmaceutical companies have consistently contended that any jeopardizing of their profitability could impede their research and development efforts aimed at formulating novel pharmaceuticals.

Stephen J. Ubl, the head of PhRMA, said that bringing in prices from socialist countries would be bad for American patients and workers. He stated that this would mean fewer treatments and cures, and it would put at risk the large investments their companies plan to make in America.

Since Trump initially sought to implement his contentious "most favored nation" strategy regarding Medicare drug pricing during his first term, it has faced considerable opposition. In the concluding weeks of his presidency, he enacted a comparable executive order, mandating that the U.S. exclusively procure certain medications, such as injected or infused cancer treatments administered in clinical settings, at reduced costs aligned with those paid by other nations.

That limited executive order encountered obstacles, as a court injunction prevented the regulation from being implemented during President Joe Biden's tenure. The pharmaceutical sector asserted that Trump's 2020 effort would grant foreign governments an advantage in determining the cost of medications in the U.S.

During a comprehensive address at the White House on Monday, Trump frequently advocated for pharmaceutical firms, attributing the elevated cost of medications for Americans to other nations. The President was accompanied by a panel of experts, including Kennedy, Dr. Mehmet Oz, the administrator for Centers for Medicare and Medicaid Services, Dr. Marty Makary, the commissioner of the Food and Drug Administration, and Jay Bhattacharya, the director of the National Institutes of Health.

He did, however, menace the companies with federal probes into their operations and liberalising the U.S. pharmaceutical market to facilitate the import of more medications from other nations.

Trump stated, "Pharmaceutical companies derive the majority of their profits from the United States, which is not a favorable situation."

Over the weekend, Trump highlighted the announcement, asserting in one post that his plan could potentially save "TRILLIONS OF DOLLARS."

However, the White House declined to provide specific details on Monday regarding the potential financial savings the administration foresees.

Over the coming month, senior officials from the health department are scheduled to meet with pharmaceutical company executives to propose revised drug prices indexed to international benchmarks, Oz announced on Monday.

Rachel Sachs, an authority on health law at Washington University, stated that the order makes it improbable Americans will experience prompt alleviation from increasing drug expenses.

“It appears the strategy is for manufacturers to be encouraged to voluntarily reduce their prices to an unspecified level,” Sachs stated. “Should they fail to achieve the intended price reduction, HHS will pursue alternative measures with a considerable timeframe, some of which might eventually, several years hence, lead to lower drug prices.”

The health department has the main power to change the prices of drugs paid for by Medicare and Medicaid because it can make rules. However, this power is not unlimited. In 2022, Congress passed a new law that lets Medicare negotiate the price it pays for a small number of prescription drugs starting in 2026. Before this law, Medicare paid whatever the drug companies asked for. Drug companies sued to stop the law, but they did not win.

The price of pharmaceuticals for millions of privately insured Americans is even more challenging for the agency to influence.

The U.S. regularly spends much more on drug prices than other big, rich countries. This problem has made both main political parties angry for a long time, but a permanent solution has never passed Congress.

Upon entering his first term, Trump leveled accusations against pharmaceutical companies, claiming they were effectively “getting away with murder,” and asserted that other nations with government-regulated drug pricing were exploiting American consumers.

Before the announcement, Trump again criticized the industry strongly on social media, saying that "Pharmaceutical/Drug Companies said for years that Research and Development Costs, and all other costs, were and would only be paid by the American people, who they saw as victims."

He mentioned the strong influence of drug companies through lobbying, saying that money given to campaigns "can do a lot, but not with me or the Republican Party."

"We are resolved to uphold ethical principles," he wrote.

Several pharmaceutical companies experienced an increase in stock market performance on Monday morning. Merck, which generated $64.2 billion in revenue last year due in part to its cancer treatment Keytruda, saw its stock rise by 3.9%. Pharmaceutical leader Pfizer, which recorded revenues of $63.6 billion in 2024, observed a 2.5% increase, while Gilead Sciences' stock climbed by 5.8%.